Innovation or Invasion?

Microsoft is making a bold bet on its latest batch of interoperable platforms. The Xbox 360 delivers games, TV, movies and music. It also integrates with their Windows Phone 7 and there are good sources that say Windows 8 OS will have Kinect as well as Xbox Live support. Microsoft is determined to gain access to the three main geographies of your life; home, work, and everywhere in between. Microsoft's level of access to media and content, when compared to Apple's or Google's, is small but it's starting to make significant strides into streamlining your digital life. The technology behind it is significant, it's the stuff of sci-fi and if the strategy works, Microsoft will no longer be catching up to the rest of the innovators.

However, Microsoft is still a business that has an obligation to its shareholders to increase its value. This is why Xbox Live has ads, even at the gold level. The Windows Phone 7 has partnerships with AT&T's U-Verse to deliver interactive tiles and features to their mobile customers. In the digital content and entertainment spaces at Microsoft, products are designed to give users a good experience and deliver content to the 35 million Xbox Live members and to its growing base of Windows Phone 7 users. In a very real sense, the cost of development, marketing and distribution is subsidized on the idea that these new products will increase the ability of Microsoft and its advertising partners to reach more consumers. That consumer data will then be churned through algorithms and ideally, the ads that you're more likely to respond to are delivered to whatever platform you happen to be on.

That's the context that surrounds Microsoft's NUAds for the Kinect. They build really cool gear that you use to consume media and then use that platform to market to you. Ideally, the better gear they make, the more time you spend with their products. What's really changed the game lately is the Kinect. We've always known that the Kinect had some pretty interesting marketing potential, but Microsoft was smart not to lead with that. It marketed the Kinect to new Xbox customers and made games that were family friendly and interactive but didn't really capture the attention of the core gaming audience. As a result, Kinect won a world record as the fastest selling consumer electronics device. In 60 days, Microsoft sold 10 million Kinects, averaging over 130,000 units per day. While there's no demographic breakdown of the new Kinect audience, it's clear that the marketing campaign worked and now the Kinect and the Xbox 360 is in more households than ever.

What Are Kinect's NUAds? Do They Really Expect me to Tweet an Ad? The core of Kinect's NUAds is interacting with an advertisement through gestures and voice. When this was announced, the near ubiquitous cry from gamers was that it was stupid. I saw people responding that they will not be tweeting any ads. I read articles where people were upset because Microsoft shouldn't be sending them ads when they bought and own the Kinect. That reaction was easily predicted. Consumers often react negatively when they know they're being marketed to when there's no immediate perception of value. In this case, the announcement of NUAds through the Kinect didn't deliver any inherent or perceived value to the audience. However, after going through the twitter feed of some of the people who tweeted about how shitty NUAds were going to be, most of those same people had either re-tweeted a promotional tweet to win something or they've actually sent out tweets to share in order to win something.

While some would call this hypocrisy, it's actually smart behavioral science. When the potential value of the result is greater than the energy invested, it's a net win. Most people, not all, will see winning a copy of a new game as a high value, totally worth the one or two clicks required to re-tweet it. The consumer lends their time to send a marketing message to their network and they have a slim chance to receive something they want. With NUAds, the stated resistance is common and popular. In reality, research shows us that participation in shared marketing is directly related to the effort required to participate. The most common one would be to "Like" something on Facebook or to re-tweet something. These take minimal effort and tend to be good ways to increase your audience. For NUAds, the barriers for participation are vocal, physical or both. So if your NUAd asks you to say "tweet this" for a chance to win a prize, the smart money is on you tweeting the ad because the perceived value is worth the effort involved, even if you don't like the idea.

Another aspect of the Kinect NUAds is the ability to physically interact with an advertisement. There's very little grey area in this aspect. There's something about this that just feels creepy and invasive. The feeling is similar to the "uncanny valley" but it's directed at the interaction between the consumer and the ad. Because there aren't any videos of those types of ads yet, it's rightfully met by skepticism. Marketers know that the more someone can interact with their marketing, the more likely they are to perform the desired action.